Van Dyck Law, LLC is a full service Estate Planning & Elder Law practice. They write about comprehensive planning in the areas of wills, trusts, powers of attorney, medical directives, Elder Law and probate & estate administration.

Family Trust

11/29/2017

“If you have lots of money, you will want to decide which state would be advantageous to die in.”

Being a snowbird, living six months in Michigan or Nebraska and six months in Florida or Arizona, can be a great life style in retirement. However, one place needs to be your legal residence. Ask yourself where are you from, or where do you vote?

The federal exemption, the amount you can give away without incurring federal estate taxes, is $5,490,000. That can be a pretty high mark, so most individuals dying between now and December only have to worry about state estate taxes.

Ask an estate planning attorney about the estate tax laws of the state where you’re considering moving. There are 15 states that currently have an estate tax upon death, and six states that have an inheritance tax.

For example, Massachusetts is one of the 15. Its state exemption is now $1 million. That means if your estate is larger than $1 million, you could owe Massachusetts estate taxes. On the other hand, Florida, which is always seeking to attract more residents from the north, doesn’t have either an estate tax or an inheritance tax.

New Hampshire is the only state in New England without an estate tax.

It’s not uncommon for a person to own property and pay real estate taxes in both states, to have a bank account in both states and to purchase insurance in both states. Nevertheless, you can only live in one state. You’re just visiting the other state. Six months and one day determines where you live and where you vote.

If you own property in different states, it may mean that your heirs will need to go through the probate process upon your death in more than one state. Consider creating a trust and having the trust own the real estate to make the transfer of property less troublesome at your death.

Snowbirds should also look into executing a Durable Power of Attorney for each state. In that way, if they do need legal or financial decisions made by another person, they will have the documents available to help them. This is an absolute necessity if you have property or bank accounts in both states.

01/16/2017

25 years ago, a 27-year-old Terry Schiavo suffered a cardiac arrest in her Florida home. The lack of oxygen left her entirely unresponsive. As Schiavo’s condition created a national conversation, attempts at revival from loved ones, doctors, experimental researchers, and activists throughout the nation proved fruitless as she remained physically incapacitated and mentally absent. After seven years of life support, Schiavo’s feeding tube was removed and her life legally ended.

When Mrs. Schiavo finally passed away, she had unknowingly become a news and media icon. Her posthumous fame came from an important discussion that we tend to avoid until it is too late: Estate Planning. Schiavo’s age and relative health led her, like most others in her situation, to put off thinking about the “what-ifs.” After her heart attack, Schiavo’s husband and parents became engaged in the very public legal battle of what their beloved Terry would want—a painful discussion which could have been avoided. Suddenly everyone had a voice in Terry’s situation. Protestors at the courthouse where her family desperately fought for whichever side they fervently needed to believe was right. Newscasters who felt entitled to say that their opinion represented Terry’s own.

Had Terry created a living will, she could have spoken for herself.

These end-of-life directives are just one of the many legal documents needed to protect our own voices when we can’t speak. A financial power of attorney, another important item, allows those you trust most to ensure your finances are being handled by designated loved ones and not put in the hands of strangers who disregard your best interests. A medical Power of Attorney, similar to a medical directive, not only protects your deathbed preferences, but also allows the right people to access important information regarding your health so that appropriate decisions can be made.

A will is particularly crucial, particularly to those with children. You will name a guardian, who will play an important role in preventing the courts from arbitrarily deciding the fate of your child’s care and housing. Don’t have a child? Without a will, your most valuable possessions will be passed along an arbitrary chain of kin. Your money, your property, your heirlooms are delegated to distant relatives you may or may not have met. Without the appropriate legal documents, the people you love may be left with virtually nothing.

No one wants to talk about preparing for death. There is some comfort in knowing, though, that once our affairs are in order, we probably don’t have to talk about it again for a little while. And if that conversation must be continued, the homework will be out of the way and we are left with the comfort of knowing that our loved ones and our dignity will be protected.

The most important part of estate planning at Van Dyck Law, LLC is ensuring that our clients know that they are safe and heard. The experience of drafting these important documents is handled with compassion, kindness, and every accommodation needed. If you have not yet begun the process of planning for this next step, please reach out to Van Dyck Law at (609) 580-1044 to arrange a free consultation.

10/16/2014

Too often, the need for the most basic estate-planning documents is overlooked or misunderstood. While many people would admit they should have a will, 50 percent of Americans with children and 41 percent of baby boomers age 55 to 64 don't have one, according to a survey from online legal services company RocketLawyer.com. If you want to stay in control of your money and medical decisions until the end, here are the five most important estate-planning documents you need to have.

A will. It does not get any more basic in estate planning than drafting a will. A will states who will receive your estate assets and care for your minor children upon your death. As you may recall from previous posts, without a will, the state where you live gets to decide who gets your assets. The court will typically disburse shares based on their degree of family relationship to the decedent (you). Commonly, this degree moves from your spouse, then to children, then to your parents, and next to your brothers and sisters. If you do not have anyone in this line-up, other relatives you may never have known will make their claims. If there is still no one to claim the money as a relative, then the state will just keep it!

Why give gifts to people you hardly know or forfeit your estate to the state when you can avoid it simply by creating a will to tell everyone in writing who gets what?

Beneficiary designations. This seems like a pretty insignificant little form, but it can be huge when it comes time to disbursing your life insurance policy or any retirement account. Chances are you probably completed and sent in a beneficiary designation form when you took out the policy or opened the account. That form identifies who gets this money when you die. This form—not your will—says who gets the money. The original article suggests that you check your list of beneficiaries when there were any life changes, like getting married or divorced, having a child, or having more children.

Financial power of attorney. A financial power of attorney (financial POA) is another very critical piece of paper. It gives a trusted individual the authority to resolve your financial issues on your behalf if you become incapacitated or unable to make those decisions for yourself. A financial POA provides you with more control over your financial affairs and a better chance that your wishes will be followed. If you do not have a financial POA, the court selects someone to take care of these decisions—this can be a very lengthy and expensive process. The court usually appoints a close family member, but that person might not be the one you would have chosen. The original article also stresses that a financial POA is critical if you have a non-spouse partner: if you designate your financial POA, you have control over the scope of powers to grant your "agent," which can encompass accessing your financial accounts and managing all your financial affairs.

Medical power of attorney. A Medical power of attorney allows you to select who will make medical decisions on your behalf if you are unable to do so for yourself. Your chosen designee will be able to access to your medical records, speak with your medical caregivers, and deal with other important issues. Your designee will also make sure that your "advanced medical directive" is carried out.

Advanced medical directive. Deciding if you want tube feeding or to be put on a ventilator can be a really hard decision for loved ones to make if you have not put your wishes in writing. An advanced medical directive should clearly define what you want and what you do not want. This takes the decisions out of the hands of your family and improves the odds that your final instructions are followed.

Once you get these documents set up, the original suggests that you review and update them from time to time, especially if you have had any changes in your life. These are just the basics. You should talk to an experienced estate planning attorney and get sound advice for all of your estate planning issues.

A living trust has advantages that a will can’t offer, so you may want to keep both. A revocable living trust is similar to a will in that it indicates how you would like your assets to be distributed after your death and can be amended anytime. While you should always have a will, a living trust—which is simply a trust set up during your lifetime as opposed to one created after your death—can be a valuable addition to your estate plan.

The estate can be settled more quickly. The assets in a trust are not required to go through the probate process, which can be lengthy and expensive. Your heirs will be able to zip past any inconvenience of a court-supervised distribution of your estate—and there is no wait for creditors to file claims, which you have to do with a will even when there are no debts. Now some states have some form of expedited probate for estates less than a certain dollar value. This is different in every state, so ask your estate planning attorney about how the law works where you live. New York, for instance, has this type of process if the estate property, not including real estate, is worth less than $20,000. Also, the original article reminds us that when most of the estate is in IRAs or life insurance, you may bypass probate if you have named beneficiaries.

You get "back-up investment help". If you create a trust, you will need to name a trustee. The trustee is tasked with managing the assets, paying any taxes, keeping financial records, and disbursing payments to the beneficiaries. There might also be a successor trustee named in cases where you are managing the trust yourself. If so, you have someone to take over the trust duties in the event you become disabled or incapacitated and cannot manage your money for yourself.

You get to set things up for your children. You should also consider a trust if you have minor children or heirs with special needs. A nice feature of a trust is that you have the option to add terms that detail how and when a child is entitled to receive the assets. And, since a living trust is not a matter of public record (i.e., filed with the probate court), the distributions for your childrenare protected from prying eyes of outsiders.

Finally, the original article reminds us that you should not transfer (retitle) an IRA to a living trust because it is counted as a withdrawal. This could mean a substantial financial penalty in terms of both income taxes and excise taxes, depending on your age.

After you have read the original article, contact an experienced estate planning attorney. Together, you will want to go over all of the details of your situation and see if a trust will help you and your family.

10/15/2014

The murkiest part of estate planning is discussing when and how to distribute your assets to your heirs. This process requires a series of considerations and trade-offs to avoid emotion-laden family problems... when it comes to these issues, things get gray because emotional factors drive decisions now. There is no correct answer on how to distribute your estate.

A recent Forbes article, titled "Estate Planning 101: Picking Your Heirs," provides some very useful instructions on basic estate planning. The article lists a series of questions that can help you organize your thoughts and prioritize your planning.

The questions include:

1. How do you feel about charities? Will you leave something now via trust or in your will?

2. Will you give each of your children an equal share of your estate, or will you divide it based on some other factors?

3. Do you plan to make some gifts or bequests now while you are still around? Are your assets significant enough to think about getting them out of your taxable estate now to reduce your heirs' estate and gift tax bill?

4. What are you going to do with gifts like artwork, jewelry or furniture? Do some of these have sentimental value to particular heirs?

5. How do you plan to tell your heirs about your wishes for your estate?

The original article asks several more questions worthy of reading. It also notes that while you may control what and how you give, you are not able to dictate the recipients' reactions, how they will use those assets, or how they will treat each other.

Answering these tough questions regarding the disposition of your assets can be stressful. Take it slow and get some help. Read through the article and speak to an experienced estate planning attorney.

10/11/2014

The recent deaths of Robin Williams and Joan Rivers have saddened millions of fans. But at the same time, they've also provided two positive models for helping to ensure that our loved ones won't have to face unnecessary complications in managing their finances after we're gone. And trusts played a crucial role in both comedians' estate planning.

Trusts really are only for rich people. Stop thinking about trust fund babies and the lifestyles of the rich and famous! There are all sorts of trusts that can be used in a variety of situations. These trusts are used frequently by regular folks just like you and me.

Trusts involve too much effort to work effectively. Some people think it is a lot of work to set up a trust. Sure, assets have to be moved into the trust, which usually means changing the formal designation of ownership from one or more individuals to the name of the trust. But creating a trust need not be complicated. As the original article notes, you can implement simple methods like naming the trust as a pay-on-death or transfer-on-death beneficiary to fund the trust without having to take immediate action. These designations keep the trust out of probate. In addition, they save on court costs and delays, but allow you the flexibility to handle your own affairs as long as possible.

You don't need a trust before death. Not so! Trusts can be a part of your financial life even while you are still around and kicking. A trust established while you are alive can manage your assets if you are incapacitated and unable to do so on your own.

Trusts offer a great deal of estate planning flexibility and let you achieve a variety of specific needs. Do not believe the myths! Read more in the original article, then consult your estate planning attorney regarding whether a trust might be beneficial in your own estate planning.